Shanghai Composite Index dips then rebounds to turn positive! Yang Delong: The bull market trend remains unchanged; recommend allocating to two major sectors | Homebody Finance

Ask AI · Why has the escalation of the Middle East situation not changed the bullish trend in China’s A-share market?

【Zhai Nan Finance ｜ Experts Face to Face】On the 30th, China’s A-share three major indexes opened lower, then dipped before rebounding. The Shanghai Composite Index closed higher. At the close, the Shanghai Composite Index was up 0.24%, the Shenzhen Component Index was down 0.25%, and the ChiNext Index was down 0.68%. More than 2,800 stocks across the market were up.

Overall, in the first quarter, the A-share market showed a pattern of volatility and differentiation. After the Shanghai Composite broke down and fell from its early-March high of 4,182 points, it entered a period of adjustment. Yang Delong, chief economist at Qianhai Open-Source Fund, said, “The core logic behind this slow-bull and long-bull trend has not fundamentally changed. Although the Middle East conflict has disrupted the bull market’s pace, it has not changed the bull market’s trend.”

Yang Delong believes that the main driver of this sharp adjustment is the escalation of the Middle East situation. Iran’s blockade of the Strait of Hormuz has raised investors’ concerns that the global economy may fall into stagflation. At the same time, to deal with the potential inflation ahead, the Federal Reserve has had to delay its rate-cutting schedule, and there is even a possibility it will not cut rates within the year. This has also led to sizable declines in the A-share market. In addition, toward the end of the first quarter, market financing balances saw a phase of decline, causing some funds to leave the market. However, after the market picks up in the second quarter, these funds that exited may flow back in again.

When discussing the trend of the A-share market this year in the second quarter, Yang Delong said the A-share market may replicate the repair performance of the same period in 2025, with a rebound of a relatively large magnitude, and may even see an independent rally and set new highs within the year. With the release of annual reports, some stocks with performance that exceeds expectations may get opportunities for valuation repair. Once the Middle East situation eases and the Strait of Hormuz returns to normal navigation, the A-share market is also expected to see a strong rally opportunity.

On positioning, Yang Delong noted that the second quarter is very likely to be a sideways market. He recommends that ordinary investors maintain a 50%–60% allocation: half in technology leading stocks and the other half in blue-chip stocks with strong performance, to achieve a portfolio with both offense and defense. “Under the current highly uncertain international situation, adhering to the value-investing philosophy is crucial.”

**　(The views in this article are for reference only and do not constitute investment advice. Investing involves risk; proceed cautiously when entering the market.)

(Made by Zheng Zheng, Responsible Editor: Dong Xiangyi, Produced by Zhai Nan Finance)